Wednesday, May 03, 2006

Nobody Does Corporate Corruption As Good As South Korean Corporations

Oh sure some American corporations such as the antics at Enron certainly gave corporate corruption a great college try effort. And many motorists blow smoke from their heads when they have to fillup at the gas pump with $3 a gallon gas blaming the "greedy" American oil companies. And some like Congressman Randy "Duke" Cunningham made the most of a corrupt relationship with a dishonest defense contractor. But it's like amateur night for corporate corruption in the U.S. compared to some South Korean companies.

During the 1980's the product reputation of Hyundai Motor Co. products suffered terriby when some executives of this company treated it more like their personal piggybank than anything else. Too many shortcuts in quality were made solely to raise profits back then. But with some changes in corporate leadership, Hyundai soon earned a new found reputation for product quality, and some new products like the Azera seem like real bargain in the competitive market with higher end luxury cars costing far more.

This week the head of Hyundai Motor Co., Chung Mong Koo, 68 was arrested on embezzlement charges, where $108 million was claimed by prosecutors to have been used to help fund bribery of government and banking officials among other financial mischief. And the son of Chung, Chung Eui Sun, who is the head of Kia Motors has also been implicated, and prosecutors vow charges against him as well.

Unfortunately things don't stop there for South Korean corporation corruption scandals. The electronic giant, Samsung Group, had a major scandal back in February when Lee Kun Hee and his children were implicated in a scandal that involved aquiring stock for less than market prices, bribing politicians and illegal stock transfer. While Lee was eventually cleared of the charges against him, the family donated a sum of $609 million in a type of legal settlement. Samsung has made a major reputation for quality electronic products such as big screen LCD display TVs. Sony has agreed to a new joint business venture with Samsung in building a major LCD screen factory.

Unlike the more Western model of business practiced in Japan, Korean companies still are nearly feudal in nature, where a close-knit family controls everything. And often, when one is trouble for financial mischief, then it is usually other family members who are involved as well.

Both Hyundai and Samsung have worked hard to develop a great line of products that is very impressive. And both corporations will survive their leadership problems. But the Korean way of doing business needs to be modeled more after Western models of business leadership. Corruption in business is a terrible practice that hurts people. It is immoral and wrong. Yet in South Korea some cultural connections to family run businesses have not caught up with modern times although the products of both Samsung and Hyundai represent some great advances in technology. The scientist and engineer is more advanced than the base human instincts sometimes it seems. Very regrettable.


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